Africa Newsletter - April 2016

Included in this issue: The African PE Industry – An Update; Mauritius Still Integral in African Focused Private Equity; Private Equity in Africa – Thoughts and Comparisons from the Middle East… and more...

PRIVATE EQUITY IN AFRICA

Addleshaw Goddard's Africa Business Group is delighted to publish its April newsletter which, this month, focuses on African private equity. We hope you enjoy reading a selection of some of the most interesting business news and articles from around the continent with particular contributions from Adansonia and ourselves. For a regular stream of business and legal news in Africa, please download our innovative "Doing Business in Africa" App, available for free for ipad users on the App Store or accessible from your browser here.

The African PE Industry – An Update

As PE funds continue to compete to be part of the African growth story, we are seeing a growing trend of increasing price expectations for relatively small assets throughout the continent and across a range of industries, with PE funds investing US$21.6 billion in Africa in 823 deals between 2010 and 2015. In the attached article, Addleshaw Goddard's Leila Belcarz provides an update on recent PE activity in Africa and provides recommendations on the approach that investment managers should adopt when seeking out African investments.

Mauritius Still Integral in African Focused Private Equity

Brendon Jones, Chief Executive Officer of Adansonia, discusses the role that Mauritius plays in PE inflows in Africa in the attached article. In particular, he explains the prevalence of Mauritius dominated PE funds in light of the country's favourable tax environment and dispute resolution framework, investment promotion and protection agreements, membership of regional organisations and its professional services industry with in depth experience of servicing investment funds.

Private Equity in Africa – Thoughts and Comparisons from the Middle East…

In the attached article, Addleshaw Goddard's Darren Harris and Ben Sims draw parallels between the African and Middle Eastern PE industries. They also highlight the advantages of using Middle East based platforms for investments in Africa, and describe some of the challenges facing PE funds investing in the Middle East and Africa and related government and bilateral agency initiatives.

PE Exits in Africa – A Way Out on the Horizon?

Recent research by Deloitte indicates that 67% of respondents expect the East African exit environment to improve over the next 12 months and 42% of respondents indicate the same for West Africa. While the African exit environment for PE funds is improving, investment managers need to remain nimble and take a long term approach to exit opportunities to achieve expected returns. In the attached article, Addleshaw Goddard's Chris Taylor and Leila Belcarz explore current trends for PE exits in Africa, and provide tips for undertaking a successful exit.

NEWS

OTHER PRIVATE EQUITY

Private Equity Builds African War Chest Amid Commodity Rout

Private-equity companies amassed a $4.3 billion war chest for investment opportunities in Africa last year as the global commodity rout and weakening local currencies cut prices of potential target companies.

Is Private Equity Gaining hold in Southern Africa?

While private equity is an alternative route to fund development in southern Africa, it remains a relatively new concept that is less pursued in many southern African countries. Part of this is because not many countries have had robust regulation and policies in place to regulate the private equity. However, things are bound to change.

SAVCA: SA Private Equity a Good Bet in 2016

Anyone looking for decent returns in the midst of a stagnating South African economy should consider the private equity space. That’s the message being put forward by Southern African Venture Capital and Private Equity Association (SAVCA).

Africinvest Invests in MicroKing Finance (Private) Ltd

Microcred Group (Microcred) and AfricInvest Financial Sector Fund (AfricInvest) are pleased to announce they have reached an agreement to acquire a 100% ownership stake in MicroKing Finance (Private) Limited (MicroKing), a leading provider of microfinance products and services in Zimbabwe. The transaction is pending final regulatory approval.

AfricInvest Invests in Outsourcia

AfricInvest, a leading pan-African mid-cap-focused private equity firm, is pleased to announce that its Maghreb Private Equity Fund III has invested in Outsourcia Group ("Outsourcia"), a Moroccan leading contact center and business process outsourcing (BPO) provider.

Synergy Capital Managers (Synergy) has announced the completion of its investment in Suburban Fiber Company Limited (Suburban), a Next Generation Broadband company focused on delivering home content solutions to retail end customers in Abuja and Lagos. This is the sixth investment from the Synergy Private Equity Fund I (SPEF).

AfDB backs Abraaj's Growth Markets Health Fund

The Board of Directors of the African Development Bank (AfDB) has approved a US$25mn equity investment in the Abraaj Growth Markets Health (Africa) Fund (the “Fund”), the Africa focused parallel partnership of the Abraaj Growth Markets Health Fund. This contribution will allow the Fund to provide access to finance and capacity building for scalable and sustainable healthcare models for lower-middle and low-income segments of the populations in Africa. The proposal is well aligned with the Bank’s High Five Item on Improving the Lives of Africans and with various Bank and target country strategies.

AVCA Comments on South Africa’s Budget 2016

The stated intention by Government to reduce the regulatory burden for business investors, as announced by the South African Finance Minister Pravin Gordhan in the 2016 Budget Speech, will help attract foreign and local investment into the South African economy – including investment by private equity and venture capital.

According to Erika van der Merwe, CEO of the Southern Africa Venture Capital and Private Equity Association (SAVCA), this was one of the positive elements of the annual fiscal policy statement, whose clear overall intent was to boost investor confidence in the South African market.

COUNTRY ANALYSIS FROM THE EASTERN AFRICA ASSOCIATION

The Eastern Africa Association provides an industry and country analysis in the attached article on the following:

Global oil prices

East African inter-regional trade networks and commercial activity

East African politics

East African economy

East African infrastructure

Somalia

Our Africa Business Group works closely with both the Business Council for Africa (BCA) and the East Africa Association (EAA) who provide us with useful information and analysis from across the continent and also support and networking opportunities.

Established almost 60 years ago, The Business Council for Africa network supports over 400 companies and entrepreneurs operating across the continent. The Business Council for Africa works closely with its members to promote business opportunities and facilitate sustainable investment across the continent. They organise over 30 African business related meetings in London each year and have 33 In-Country Directors in West and Southern Africa and thus provide a very useful platform for networking for both new investors and those already operating on the continent. The EAA was established in 1964 on the initiative of a number of prominent, mainly British based companies with business interests in East Africa and it now has over 400 member companies from more than 25 different countries. The EAA aims to facilitate successful participation in the economic development of Eastern Africa by member companies. The EAA exists to support the business activities of its members in the countries covered by providing channels of communication and lobbying on common issues, either through the various diplomatic missions, the international financial institutions or directly with the respective national government.

Chris Taylor

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The Africa Business Group represents AG's operations across the African continent, which is home to some of the fastest growing economies in the world, presenting exciting opportunities for our clients.